Buckeye Announces Fourth Quarter and Fiscal Year 2013 Results

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Buckeye Announces Fourth Quarter and Fiscal Year 2013 Results

MEMPHIS, Tenn.--(BUSINESS WIRE)-- Buckeye Technologies Inc. (NYS: BKI) today announced earnings for fiscal year 2013. Net sales for the year were $812 million, down $82 million or 9% compared to net sales from continuing operations in fiscal 2012. Specialty Fibers external sales were down $72 million or 11% due to a small drop in shipment volume, lower fluff pulp and specialty cotton fibers pricing, and unfavorable sales mix due to weak market conditions in Europe. Nonwovens sales were down $10 million entirely due to the sale of the Merfin Systems converting business in mid-fiscal year 2012.

Adjusted net income* for the 2013 fiscal year was $92 million or $2.32 per share, compared to a record $111 million or $2.76 per share in fiscal 2012, and the previous record net income of $91 million or $2.23 per share in fiscal 2011. The two biggest drivers of the reduction in adjusted net income between fiscal years 2012 and 2013 were lower fluff pulp prices and unfavorable sales mix in the specialty fibers segment, where operating income was down $34 million year over year. Operating income for the nonwoven materials segment was up $9 million in fiscal year 2013 compared to fiscal year 2012 due to a large reduction in fixed manufacturing costs resulting from the closure of our Delta, B.C., Canada airlaid facility in December 2012.


Fourth quarter net sales were $216 million, down $9 million or 4% versus net sales of $225 million in the fourth quarter of fiscal 2012. While shipment volume was up 9%, driven by increased shipments from our Foley wood fibers facility, this was offset by unfavorable mix and lower selling prices in our specialty fibers segment.

Fourth quarter adjusted net income* was $23.0 million or $0.58 per share. This excludes net after-tax charges of $5.0 million, or $0.13 per share, primarily relating to the pending merger with Georgia-Pacific and adjustments related to the CBC fuel tax credit. Adjusted net income* was down compared to the prior year's $26.2 million or $0.66 per share, which excluded net income of $2.3 million, or $0.05 per share, primarily consisting of adjustments relating to the cellulosic biofuel credit. This $3.2 million reduction in adjusted net income* was mainly driven by unfavorable sales mix and by lower selling prices for fluff and specialty wood pulp. We generated $61.4 million in net cash provided by operating activities during the quarter, invested $30.2 million in capital projects (including $15.5 million on the oxygen delignification and specialty conversion projects), reduced debt by $21.1 million to $41.2 million, and paid a regular quarterly dividend of $3.5 million. At the end of the quarter our cash and short term investments stood at $58.1 million.

Comparing the fourth quarter to the third quarter of fiscal 2013, sales were up $20 million or 10% as shipment volume was up 15% in our specialty fibers segment and was flat in our nonwovens segment. Adjusted EPS* of $0.58 was up $0.05 versus the third quarter on the increase in shipment volume.

Buckeye, a leading manufacturer and marketer of specialty fibers and nonwoven materials, is headquartered in Memphis, Tennessee, USA. The Company currently operates facilities in the United States and Germany. Its products are sold worldwide to makers of consumer and industrial goods.

Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws and is intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" generally can be identified by the use of forward-looking terminology such as "assumptions," "target," "guidance," "outlook," "plans," "projection," "may," "will," "would," "expect," "intend," "estimate," "anticipate," "believe," "potential," or "continue (or the negative or other derivatives of each of these terms or similar terminology). The "forward-looking statements" include, without limitation, statements regarding the economic outlook for Buckeye and the demand for its products, Buckeye's pending business combination with Georgia-Pacific LLC, the results and timing of Buckeye's strategic investments and growth opportunities and expected levels of cash flow and debt reduction. These statements are based on management's estimates and assumptions with respect to future events and financial performance and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results could differ materially from those projected as a result of certain factors. A discussion of factors that could cause results to vary is included in Buckeye's Annual Report on Form 10-K and other periodic filings with the Securities and Exchange Commission.

Note Regarding Non-GAAP Financial Measures

*This release includes certain financial information not derived in accordance with generally accepted accounting principles ("GAAP").The non-GAAP measures presented are "adjusted operating income", "adjusted net income", "and adjusted earnings per share", "free cash flow".The first three measures are equal to operating income,net income and earnings per share excluding the after-tax effects of alternative fuel mixture credits (AFMC) and cellulosic biofuel credits (CBC), goodwill and long-term asset impairment cost, restructuring cost, gain on sale of assets, and GP merger related expenses."Free cash flow" is equal to net cash provided by operating activities less net cash used in investing activities (excluding purchase of short term investments).

          

 

($ in Millions)Q4-2013Q4-2012Q3-2013YTD-2013YTD-2012

Operating income

Operating income in accordance with GAAP$27.8$40.0$29.9$121.4$164.0
Special items:
GP merger related expenses5.5------5.5---
Restructuring costs0.3---0.89.90.3
Asset and Goodwill impairment---0.30.73.64.5
Adjusted operating income

(Excludes Americana)

$33.6$40.3$31.4$140.4$168.8

 

Net income

Q4-2013Q4-2012Q3-2013YTD-2013YTD-2012
Net income in accordance with GAAP$18.0$28.5$28.3$88.7$90.0
Special items, after-tax:
GP merger related expenses3.6------3.6---
Gain on sale of assets held for sale------(7.3)(7.3)---
Earn-out from King sale------(0.2)(0.2)---
AFMC / CBC1.1(3.3)0.1(4.4)(10.5)
Restructuring costs0.31.20.89.61.9
Asset and Goodwill impairment---(0.2)(0.7)2.229.6
Adjusted net income$23.0$26.2$21.0$92.2$111.0

 

Earnings per share (EPS) - Diluted

Q4-2013Q4-2012Q3-2013YTD-2013YTD-2012
EPS in accordance with GAAP$0.45$0.71$0.71$2.23$2.24
Special items, after-tax, per share:
GP merger related expenses0.09------0.09

---

Gain on sale of assets held for sale------(0.19)(0.19)

---

Earn-out from King sale---------------
AFMC / CBC0.03(0.08)---(0.11)(0.27)
Restructuring costs0.010.030.020.240.05
Asset and Goodwill Impairment------(0.01)0.060.74
Adjusted EPS$0.58$0.66$0.53$2.32$2.76
 

($ in Millions)

Q4-2013

Q4-2012

Q3-2013

YTD-2013

YTD-2012

Free Cash Flow

Net cash provided by operating activities$61.4$87.4$46.1$136.2$171.8
Proceeds from sale of assets0.26.119.920.111.7
Purchases of property, plant & equipment / Other(30.4)(38.9)(27.4)(109.9)(85.4)
Proceeds from insurance settlement related to capital investments---------4.3---
Free Cash Flow$31.2$54.6$38.6$50.7$98.1
 

Loss from Discontinued Operations

As a result of the disposition of our Americana operations in Q4 2012, we have reported the results of the operations for this business, including the loss recognized from the sale and less applicable income taxes (benefit), in discontinued operations in our consolidated income statement. The table below shows the detail behind the loss from discontinued operations for each period reported in the press release financial statements.

        

($ in Millions)

Q4-2013

Q4-2012

YTD2013

YTD2012

Net Sales$---$---$--$14.3
COGS---0.3---14.9
Gross Margin---(0.3)--(0.6)
Asset Impairment Cost---0.1--49.2
Other Operating Expense---1.8---2.7
Operating Loss---(2.2)--(52.5)
Net Interest Income---0.1--0.5
Foreign Exchange & Other---(0.3)---(0.2)
Loss before Tax---(2.4)--(52.2)
Income Tax Benefit---(0.5)(1.4)(23.3)
Income (Loss) from Discontinued Operations$---$(1.9)$1.4$(28.9)
 

 
BUCKEYE TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except per share data)
          
 
Three Months EndedYear Ended
June 30, 2013March 31, 2013June 30, 2012June 30, 2013June 30, 2012
 
Net sales$215,597$195,562$224,940$812,450$894,881
Cost of goods sold 167,247  152,204  171,877  623,303  677,396 
Gross margin48,35043,35853,063189,147217,485
Gross margin as a percentage of sales22.4%22.2%23.6%23.3%24.3%
 
Selling, research and administrative expenses19,77611,40812,25756,56846,704
Amortization of intangibles and other5315175102,0702,021
Asset impairment loss-7013293,5912,094
Goodwill impairment loss----2,425
Restructuring costs304
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